How K12 and stationery exports making it big

Gupta: “The K12 area is where the company is more focussed today"

While speaking to a leading business channel, Himanshu Gupta, MD, S Chand & Company, that K12 is the area the company is focusing on, with around 75% or close to 75% of its revenue coming from K12. “We believe K12 is going to grow further,” he says.

In India, there are around 1.5 million schools with 270 million students. In addition, 3,50,000 schools are privately owned and this segment is growing organically, The growth of the private school market is more than 10% every year.

Gupta adds, “S Chand has been enjoying EBITDA margin, including the new acquisition of Chhaya Prakashani that we did last year. If we include that on a consolidated basis, we are growing at an EBITDA margin of around 26.4% for FY16. That gives around Rs 176 crore of EBITDA margin of FY16.”

Last year in October, another major Navneet Education acquired Britannica’s Indian curriculum business for Rs 88 crore. Britannica India’s Curriculum Division designs and develops educational products, used by nearly five million students, across India and Indian schools abroad. Under the agreement, the current Britannica business unit will become an independent company within Navneet and will realise considerable synergies with Navneet’s larger Indian group. The company will market Britannica’s existing India-specific curriculum titles, such as Know for Sure and The English Channel, as well as develop new titles under Britannica’s brand, editorial supervision and guidelines for seven years.

Chicago-headquartered Britannica will continue to offer its award-winning digital education solutions.

Gnanesh Gala, MD, Navneet Education, assesses the situation: “The Q3 was excellent in terms of topline and bottomline. Navneet Education expects an overall growth of 17-18% for FY17 as well as for FY18. The company is not planning to demerge its stationery business.”

Even today, Navneet has a market share in excess of 60% in two major state boards (Maharashtra and Gujarat). It has a planned expansion into newer states and CBSE curriculum books.

Navneet’s investments in K12 technologies through its subsidiary Navneet Learning LLP has been yielding positive results. A year ago, the company had 12 CBSE schools under management with a brand like Orchid Internationals, with student enrolment of more than 10,000.

Meanwhile, Vinod Vohra, chairman of book printing major Repro India, during his AGM address to shareholders provides an insight into the publishing mindset. He says, “Most of the educational publishers are trying to adapt to the new way of doing business. Customers are moving to digital platforms or demanding printed books in a shorter timeframe and at a lower cost!”

Vohra adds, “The traditional publishing process is an elaborate and unwieldy one, laying the publisher open to many risks. These include rising obsolescence costs, inventory management, high returns of unsold books, an impossibly long collection cycle... the list goes on. Additionally, making books visible to readers poses a challenge, with the publishers’ reach restricted to physical distribution and sales channels.”

This is one of the reasons Repro has become an aggregator of titles from Indian publishers. Vohra says, “These titles are also being sold in India, without maintaining any physical stock of the books. These digital files from Indian publishers are also being given to the Ingram Content Group for global distribution.”

This explains why most of the publishers in India are working on a three-pronged strategy. One, a strategy of consolidation in traditional businesses; two, an increased focus and emphasis on the eTail business; and three mid-term planning of activity and reducing operating expenses wherever possible and managing fund flows in a way that lead to savings in borrowing costs.

Gupta adds, “S Chand’s printing press unit that we had set up around two and a half years back that has started to kick off a better operating leverage.”

Most of the majors are focus on the regional markets in the next three to five years to fulfill the print requirement,” Gupta says, adding, “We believe there is lot of printed books potential in the regional markets and we will try to use that potential and lookout for some good opportunities and grow.”

Thus far, if balance sheets are anything to go by, the three-pronged strategy seems to be succeeding.